It was a day for two Comeback Kids, as John Key announced who he might dance with on election night and Winston Peters & Peter Dunne returned from the wings to take centre stage

This evening, as high winds continued to batter Auckland, I picked up branches in our front yard and thought about Winston Peters and Peter Dunne. In recent years both have been written off as broken men: Peters in 2008 when he and New Zealand First failed to win a seat in parliament and Dunne last year when his refusal to cooperate with the Henry inquiry saw him forced to resign as a minister. It seemed that after long years of service and stickability, the winds of political fortune might finally blow them down.

Yet at the start of election year 2014 they look as sturdy as any trees in the forest of parliament; political necessity, it seems, offers deep roots. Today's announcement by Prime Minister John Key that he's open to a coalition deal with New Zealand First and his reinstatement of Peter Dunne as a minister in his government provides political shelter belts for both late in their political careers and, frankly, saves two men who might otherwise have struggled to win again.

Key has, as promised, laid out who he's willing to work with should National be in a position to negotiate a government after this year's election. United Future, ACT, and the Maori Party top the list as members of the current government.

But as we all know, we're talking about a third term here with the centre-left Labour-Greens coalition neck-and-neck with National in the polls. This is like no election year Key has faced before and he no longer has the luxury to espouse the sort of principles that saw him rule out a coalition with Peters in the past two elections. So onto the list come the Conservative Party and New Zealand First.

In short, as I wrote in November, Key knows the election will be close and his job may depend on just one or two seats. Today's announcement confirms his "many baskets" strategy. That is, he's admitting that his current four-pronged coalition is unlikely to be enough to win the Treasury benches for another term. All four parties have lost support this term and can expect to receive fewer votes than in the past election. So to command a parliamentary majority he's going to need another friend or more wasted votes (and he can't risk relying on the latter).

Key's hope will be that the Conservatives can do the job for him and that its leader Colin Craig doesn't over-reach between now and November. Talking about repealing this law or that in January only serves to box in National and the Conservatives and is unhelpful in the extreme. It just goes to show that he can't gamble the House on Craig alone, and so he has to swallow a dead rat and refused to rule out his nemesis, Winston Peters.

This shows just what lengths he's willing to go to in his desire to stay Prime Minister. Because let's make no bones about it, Key will have hated opening the door to Peters. Hated it.

Key and Peters do not like each other. Key's refusal to do business with Peters in the past has cost New Zealand First votes and earnt Peters' ire; it cost him a seat in 2008 when older conservative voters who might otherwise have backed New Zealand First were told that a vote for it was essentially a vote for Labour and the Greens. New Zealand First got 4.07 percent, Simon Bridges got Tauranga and Peters got three years in purgatory.

Today's announcement removes the hold Key had over Peters; indeed, it's an acknowledgement that Key's dominance of the New Zealand political scene is waning. A Prime Minister who has been able to govern pretty much however he's wanted for five years, today admitted he may need an enemy to be his friend, while that enemy has no need to return the love. Not until the day after the election, anyway.

While still far and away the most popular and powerful politician of the day, Key can no longer presume to have enough votes to not care about whether New Zealand First makes it back or not. And he knows it. As a result, Peters, already on a healthy 4.3 percent in Pundit's poll of polls, can refuse to say who he might work with after the election and therefore maxmise his votes from both the centre-left and centre-right. He can do what he does best – campaign on the platform that he'll "keep the other buggers honest".

And to what must be his deep chagrin, Key has today built his hustings for him.

(The greatest risk to Peters is now Colin Craig and Key might hope that the cranky vote splits and New Zealand First gets stuck on 4 percent, thereby usefully wasting some anti-government vote. But that's a line of thought for another post).

And what of Peter Dunne? After the Kitteridge report was leaked and everyone pointed their fingers at Dunne (despite his repeated denials), he cut a tragic figure. For some, he was a laughing stock. He refused to show the emails between him and reporter Andrea Vance to the inquiry investigating the leak. He claimed a point of principle around privacy. Others saw a man hiding the smoking gun. Either way, it cost him his ministerial portfolios. But now he's back, a minister outside of Cabinet once more.

It was Helen Clark who created the trend of temporary sackings for ministers and Key has continued with the ploy. But it's one I still don't pretend to understand. Last June Key said Dunne had to hand over the emails or resign. Dunne resigned. The inquiry Key launched effectively said nothing could be proved and failed to nail a culprit, but insisted there were no other suspects except Dunne. Key had been determined to find the source of the leak, saying this was all a "very serious matter".

Seven months on, we still don't know who leaked the report. Most observers assume it was Dunne, Dunne denies it. Key can't say who leaked it. Does he, like most others around parliament assume it was Dunne? Or does he think his inquiry missed someone? If not, does he then think Dunne is lying to him and to the public? And if so, how is Dunne now fit to be a minister again?

Even if he's not lying, what has changed that made him unfit to be a minister in June, yet fit for service today? It seems completely inconsistent to me.

Yet today Dunne got his reprieve. To answer my earlier question, he's back because he's given National the votes they needed for law changes such as the SkyCity deal and because he's committed United Future to National for as long as they both shall live. Whether or not he leaked and lied, loyalty has its reward.

As a result, Dunne is likely to be able to celebrate not just a renewed ministerial career (and his associate conservation role will allow him to again try to win the huntin' and fishin' vote) but a tacit endorsement by National in Ohariu. Again, Key has had to admit he needs Dunne, whether he likes it or not.

It's not a day Key will have enjoyed, but it was a necessary day; a day any leader looking for a third term would have grudgingly but willingly endured. And it sets the scene for a compelling political year in which strategy and the pull of Peters, Dunne and other minor party leaders will be as important as major party policy. Game on.

Yes. Yes, he does. Here's what he said in answer to the question as to whether he thinks Dunne was the leaker: "I'm prepared to accept Mr Dunne at his word, but I can't categorically support that view because I don't actually know what happened there." I think it's safe to say that that's as close to a "yes, I think Dunne done it" as we're likely to hear from him (in a public setting!)

Whether or not he leaked and lied, loyalty has its reward.

And Ohariu is another seat towards 61 ... which Dunne has a better chance of winning if he can say "Look folks! Your local MP is a Minister, with the ear of Government!", rather than a discarded face-from-the-past that the PM obviously doesn't trust.

Steve, on what basis do you say the Conservatives have a greater share than NZF? Not just i-predict guesses?

Thanks for the link Andrew. I suppose that's as close as you might expect, but everything he's said about Dunne has been designed so that we can't be sure that he thinks it was Dunne what done it.

Key has been scrupulous in accepting Dunne at his word and insisting at other times that he still trusts Dunne... A strategy that allows him to return to the fold without Key being accused of hypocrisy and, as you point out, be in a strong position to deliver that extra seat. But I'd like to see/hear him questioned on that point and have him try to justify this decision.

I suppose that's as close as you might expect, but everything he's said about Dunne has been designed so that we can't be sure that he thinks it was Dunne what done it.

But, to shamelessly rip off Sherlock Holmes, the important point is that the dog didn't bark in the night. If Key genuinely thought Dunne was as innocent as he says (or, at the very least, thought he could claim this without provoking howls of derisive laughter), why wouldn't he say so? And is there any functional difference between having a Minister who you know leaked against your interests, and having a Minister who you so strongly suspect might have leaked against your interests that you're unable to hand-on-heart say "he didn't do it"?

Note that we've seen this sort of abstentionist position on "the facts" before - remember how Key said that if Banks lied to him, he'd have to resign ... but then refused to personally ask John Banks about what he knew (and when he knew it) with respect to Dotcom's donation?

It's the reality of politics, of course. You need to be able to count to 61. If that means being prepared to say you don't know things that you could quite easily find out ... well, it's not exactly a lie, and as Key himself said: "Well, there's quite a wide definition of ethics".

You've framed the question well, Andrew. I didn't hear the round of interviews he did yesterday, but it would be good for someone to ask him 'can you hand on heart say that Dunne did not leak?'... Which means the follow-up is 'so why is he fit to be minister now when he wasn't seven months ago?'. If Key answers that back then it was an issue of him complying with the inquiry, well, he still hasn't complied, 'so again, what's changed?'

I reckon you may be onto something there Richard. I decided not to get into that angle in this post, but he could end up with the casting votes without actually entering a coalition with anyone – freedom and power, but no baubles. Tempting, I'd say.

Andrew , yes we could just roll the dice but this election is so full of probabilities, speculation and uncertainty it certainly does make it interesting. I wonder if it will appeal more to all those bored disinterested voters out there. If they come on in droves it will be even more unpredictable.

BTW Tim I can't put url links in the comments , they don't seem to be active?

Alan, I think it unlikely. My assumption is that Cunliffe will tack to the centre this year, making Labour more acceptable to Dunne. But there are some pretty big gaps in their thinking, Dunne's history with Labour and most of all the Greens. It's hard to see how a Labour-led government could keep both the Greens and Dunne happy.

Richard, there's no reason why you shouldn't be able to put a link in the comments. I'll test it by linking to Bryce Edwards' column today and we can see if that stays active. That's using the link icon in the bar above and cutting and pasting the link into the wee box that appears.

Otherwise you can always cut paste the link into the body of the comment...

Mandy, you've got both major parties competing for his, er, affections but so I'm not sure why you'd assume Labour would be the loser in that. Peters will naturally do what's best for him and his party (and his supporters), but who's to say what that will be?

If you follow the link to my related November piece you'll see some of the questions around which way Peters might jump. For example, would he want to be part of a fading third term administration that would probably give him only three years in government. Conversely, would he want to play third fiddle to the Greens? So which bed are you assuming he'd choose?

Alternatively, he may retain more influence by not choosing either and just supporting a minority government that needs to come to him bill by bill. How's that a naive view?

One thing I do know about Peters is that you can't assume anything with him.

As for desperation, no it wasn't my theme. That's not a word I used in this post. My theme was the resurgance of Peters and Dunne just as so many were eager to write them off, and the fact that Key's willingness – possibly even his need – to negotiate with them shows that he's not as strong as he once was. Labour's plight is for another day!

Tim: My assumption is that Cunliffe will tack to the centre this year, making Labour more acceptable to Dunne

I think a correct assumption...and more! But forget Dunne.

The logic is fairly simple:

To win the leadership of the Labour Party he had to spout a load of Far Left rhetoric to please the unions. Having got hold of the reins of power he must now drag party policy back to the middle in order attract floating votes in the middle. By the time of the election I reckon we won't be able to fit a cigarette paper between Labour and National policy.

Meanwhile he's got to remove the dissenters from his cabinet. He cannot afford to go forward with the leftovers from the Clarke era. Many are well past their sell-by dates. Time to parachute in some competent list MPs who can count?

My measure of the guy - he's a political thug who will do whatever it takes to gain power and hold it.

The 'tack to the centre' is a popular trope with right-wing pundits. But the centre of what? Even the so-called 'far-left' of the current Labour party are only very moderate social democrats - very much what NZ is used to. No amount of rightward drift will get Cunliffe the neo-liberal vote.

His current firm showing in the polls endorses his move to the left. The cabinet politics will be interesting. I imagine he will try to avoid bloodshed - the membership will make the old 'New Labour' neo-liberals quite uncomfortable enough without him having to act often. His priority will be to get NZ moving forward - the Clausewitzian take on morale. Credible policies on housing and the economy will rapidly consign the Key years to the history book of NZ economic disasters with Muldoon and Douglas, where they belong.

I remember when anything resembling an asset sale was electorally toxic and interest-free students loans were a deal-maker with the electorate. That's recent NZ history. Cunliffe will rebalance the focus of government- not taking such glee in bashing the poor, both with and without employment, but will still be keen on getting money into NZ, just likely to concede things in different areas.

It's a complex question, in small groups he can be very compelling. He's very good close up. Even my uber right wing friends find him engaging. I don't know how he plays in other social demographic. I'd imagine fairly well, he's got that "son of the manse" thing going on.

In the larger set peice settings, he can be a bit bombastic and dull for my taste, but not bad. He needs to be more confident and deploy some humour.

He's not going to win a debate against Key by going over the top of him, he's going to have to crack a one liner and make Key look dumb. It's a big ask, Key is good on his feet, but not impossible, Key can lack details. Cunliffe will need to be much better prepared than Goff and have his numbers nailed down.

Policies don't really matter for the election, sure manufactured differences will be brought to the fore to try and energise the electorate, but the truth is Labour and National are simpatico on 95% of the issues.

As I've said before, I think he'll get over the line if he can drive turnout to 2005 levels. We had 81% in '05 but just 75% last time round. The labour vote stayed home last time.

Alan - I don't think it was just the Labour vote that stayed at home,in fact it won't have been. It's a matter of how much potential Labour vote stayed at home versus how much potential National vote stayed at home.

Remember that National's pre-election poll support was mostly over 50% and this dropped back to 47% in the election. Not all of that will have bled to NZF and it certainly didn't go to Act or UF. I suspect that major factors were voters didn't think Labour (or Goff) were up to it, and for National there was resistance to allowing them to govern alone.

"I suspect that major factors were voters didn't think Labour (or Goff) were up to it"

Pete I think you hit the nail on the head - the "why bother" factor must have been significant when Labour's offerings in both policy and leadership looked so weak in 2011 . I had many Labour freinds shaking their heads in dispair in 2011.

Frankly they still have a way to go to show those disaffected labout voters a credibile and compelling reason to vote

I did an excel file a while back that tracked turnout changes by seat and compared and cross referenced with party vote. It showed a clear trend, the higher the labour vote in pervious elections, the greater the fall in turnout 05 vs 11.

Would love to see that spreadsheet Alan! Pete, I think it was largely Labour voters who stayed away last time, and mostly for the reasons Richard says. And the simply sense that there was no chance of winning. This time there's a chance, it'll be close and you should expect a high turnout.

Alan, Cunliffe is also very good on TV. At least he always has been, presumably he won't lose that with the leadership mantle, although you do see some sportsman (crickters especially) go all anonymous when they get the captaincy... I'm still waiting to see with him. But rest assured Key won't be underdone this year of all years.

Stuart, true about 'the centre'. Our centre probably skews right these days, but we're talking about the centre of NZ politics as it stands.

The skewing of the centre to the right is a property of the upper income brackets. The stagnant or declining real wages, declining employment security, and rising cost of living, unemployment, and underemployment dispose the mass of New Zealanders to move left. This left inclining group is significantly larger - but they are not the commentariat.

Had the neo-liberal reforms succeeded the story would be very different, and MPs would not now be the most hated and least trusted group in New Zealand society. Our neo-libs were dishonest and went for personal profit rather than effective reform. When the public finally turn it will go badly for profiteers.

So John Key has got over his $42,000 hissy fit over who stole his thunder by leaking a report he was going to release a couple of days later anyway? After all that is so 2013!!

Dunne’s return to a ministerial role will score him a $64,000 pay rise and presumably a bigger office, but what of United Future as a party? I have heard that when their membership crisis and deregistration erupted there was a spoof among students at Victoria University to join the United Future party, so the conference where delegates were almost outnumbered by media may be a truer reflection of their support.

United Future used to promote itself as a centrist party that could work with either National or Labour. However that is no longer the case, Dunne has now repudiated any possibility of working with Labour and indeed indulged himself in increasingly nasty attacks on Labour. The reality is that there is no longer any clear distinction between United Future and National, at least the "wet" groupings within National. As John Armstrong wrote “The problem is that Dunne, though not a clone of National, has morphed into something close to it. Voters can no longer spot the difference”. They are not aided by the total lack of any policy information on their website. Although on that score they are at least one step ahead of the Internet Party which has no website!!

Stuart you are absolutely right (or rather correct, no pun intended). On any global and historical analysis our whole political spectrum has shifted to the right over since the 1980s, as it has in most of the western world still captivated by neoliberal ideology. For example see the Political Compass for the 2011 election: http://www.politicalcompass.org/nz2011 The only parties moderately left of the centre line are the Greens and Mana, and interestingly marginally the Maori Party, it can't be assumed they will again coalesce with National as highlighted by their statements today. However Labour is as far right of the centre line as Mana is left. It will be interesting to see if they do an analysis this year where Labour ends up, but we can be sure it will not be "far left" as Key likes to claim. The reality is National is "far right".